European markets have made nervous gains, providing some relief from the havoc caused by the debt storm engulfing the US and eurozone.

In London, the FTSE 100 Index rose 2%, with the DAX in Germany and the CAC 40 in France showing similar gains, as buyers returned to the market following the recent rout.

The Dow Jones Industrial Average in the US lost 4.6% on Wednesday, as fresh panic about the eurozone debt crisis emerged amid rumours that France's credit rating could be cut.

But Asian markets dropped by less than many had expected overnight, with the Nikkei in Japan off 0.6% and the Hang Seng in Hong Kong down 1%.

In the UK, banks were among the biggest risers, with HSBC up 3%, but gains were seen across the market, as opportunistic traders eyed potential bargains.

London's blue chip share index has fallen nearly 15% in the last two weeks, which has slashed some £226 billion from its value.

Cameron Peacock, an analyst at IG Markets, said: "Arguably, even with the uncertainty, stocks are looking quite cheap down at these levels, especially with companies building cash piles and adding scope for some mergers and acquisitions activity once we're out of the August lull."

But the markets, which have swung wildly in recent days, are expected to remain volatile.

Fears about the strength of the US economy continue to dog sentiment after Standard & Poor's stripped it of its AAA credit rating for the first time in its history, with some economists worried it will lead the world back into recession.

And there are still major problems in the eurozone, where the European Central Bank has had to step in to buy bonds to shore up the economies of debt-ridden Spain and Italy in an attempt to restore confidence.